A Suffolk Federal Credit Union branch in Medford in 2013.

A Suffolk Federal Credit Union branch in Medford in 2013. Credit: James Carbone

Suffolk Federal Credit Union has reached a settlement with a Long Island housing group over charges that it discriminated against African-Americans and Latinos who sought information about mortgage loans.

The Medford-based lender will offer subsidies of up to $1,250 each to eight borrowers a year, for three years, in certain Suffolk County ZIP codes, provide more staff training and hire a third-party group to test for discrimination by credit union employees, Suffolk Federal said in a statement released last week. The statement was released jointly with Long Island Housing Services, the not-for-profit group in Bohemia that made the allegations against the credit union in a 2016 federal complaint.

The credit union said in the agreement signed this month that it “denies any allegation of engaging in discriminatory lending on a prohibited basis.”

Credit union president and chief executive Ralph D. Spencer said in a statement that Suffolk Federal “has a long history of serving the people of Suffolk County, and will continue to work to ensure equal access to mortgages and other financial opportunities for all members of our community. As a member-owned cooperative, we determined that it was in the best interest of our members to resolve this matter with LIHS quickly rather than endure a lengthy and costly litigation process.”

Ian Wilder, executive director of Long Island Housing Services, said in the statement that the group was glad to partner with the credit union “to increase the access to mortgage opportunities for communities that have historically had difficulty obtaining access to credit.”  

The credit union and the housing group did not immediately respond to requests for further comment on Monday.

Suffolk Federal will provide the subsidies  in certain “underserved” Suffolk County ZIP codes, the credit union said in the statement. The subsidies can be used for down payments and closing costs. The ZIP codes 11701, 11706, 11713, 11717, 11722, 11726, 11749 and 11798, span sections of Amityville, Bay Shore, Bellport, Brentwood, Central Islip, Copiague, Islandia and Wyandanch, among other communities.

The lender also said it will offer marketing materials in English and Spanish and a language access line for applicants whose primary language is not English.

In the housing group’s 2016 complaint, filed with the federal Department of Housing and Urban Development, Long Island Housing Services said the credit union violated the federal Fair Housing Act as well as state and county laws against discrimination.

The group said it looked for discrimination at the credit union by conducting five in-person “paired tests” and four tests over the phone.

In each test, an African-American or Latino applicant asked for information about refinancing a loan or buying his or her first home, and a slightly less qualified white applicant sought the same information, using the same approach, the housing group said. 

Despite having inferior credit scores and incomes and more debt, the white applicants “received prompter and greater service,” the group said in its complaint. In one paired test, the African-American tester was quoted a higher interest rate than the less-qualified white tester. In another case, an African-American tester was told she had to apply for preapproval before speaking with a loan officer, while a white tester was contacted by a loan officer who gave specific information and offered to help with the half-hour-long application process.

Federal mortgage data from 2011 through 2014 showed that the credit union has a history of denying loans to African-Americans and Latinos at a “much higher rate” than whites, the housing group charged in its complaint.

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